Walmart (WMT -1.69%) is a solid long-term investment that you can hold in your portfolio for many years. But if you're a dividend investor, you can do a heck of a lot better than the income you can earn from this stock. At just 1.6%, it's not much higher than the S&P 500 average yield of 1.4%.
Drugmaker AbbVie yields an impressive 4.5%, and would generate significantly more revenue for you than Walmart on a recurring basis. A $20,000 investment in the healthcare stock would earn you $900 on an annual basis (assuming the payouts remain intact), whereas at a 1.6% yield you're only making $320. In its most recent earnings report, released on April 30, AbbVie posted diluted earnings per share (EPS) of $1.99 for the first quarter ending March 31. That is well above the $1.30 quarterly dividend that the company pays, putting its payout ratio at 65% based on the current run rate. What makes AbbVie an attractive buy even beyond its dividend is the fact that its business could get a boost this year as the economy opens back up, especially if people are going out more to social events and want to improve their appearances -- say, with Botox.
Last year AbbVie completed its $63 billion acquisition of Botox maker Allergan. With the inclusion of Allergan in its portfolio, the company reported sales of $13 billion in Q1, for a year-over-year growth rate of 51% (and 5.2% on a comparative basis). This month it also announced the acquisition of Soliton, which through its rapid acoustic pulse technology can improve the appearance of cellulite. Both acquisitions could position AbbVie for some terrific growth ahead.
Prior to the Soliton acquisition, the company had already raised its guidance for diluted EPS this year. Previously, AbbVie was forecasting a range between $6.69 and $6.89; now it expects between $7.27 and $7.47. Last year, AbbVie's diluted EPS totaled just $2.72.
With a stronger bottom line, investors can benefit from a rising share price amid more bullishness. And there's also more room for the Dividend Aristocrat to continue raising its payouts, making AbbVie a solid income investment to add to your portfolio today.
2. Kraft Heinz
If you think Walmart is a stable business, then you'll love Kraft Heinz. The big-box retailer is the food company's largest customer, accounting for more than 20% of its revenue in each of the past three years. And at 3.7%, Kraft pays its shareholders a much higher dividend than Walmart. A $20,000 investment in this stock could earn you $740 in annual income. With a diluted EPS of $0.46 in the period ending March 27, Kraft also has sufficient room to support its quarterly dividend payments of $0.40. On a cash-flow basis, things look even better -- the company has reported free cash of $4.8 billion over the trailing 12 months, easily enough to cover its $2 billion payouts during the same period.
When the company last released its results on April 29, its net sales of $6.4 billion represented growth of 3.8% from the prior-year period. Kraft expects similar numbers for the next quarter, projecting mid-single-digit growth in its top line. This is another business that could do well amid reopenings in the economy, as foodservice businesses could drive up demand for Kraft's products. The company's CEO, Miguel Patricio, says the quarter exceeded expectations and the business is going to invest in its operations to scale and drive even better results this year. If that happens, then Kraft could be another solid stock own in 2021 -- not just for its dividend income, but also for the returns it can generate for your portfolio.
ViacomCBS may not be a name that pops out at you when you think of big streaming stocks to own. But with the company announcing plans to raise a whopping $3 billion to invest in that segment of its operations, it may not be long before its Paramount+ service starts to make more of a name for itself and draw in more subscribers.
The company is already seeing some solid growth numbers there. It released its first-quarter results on May 6, and global streaming revenue grew 65% year over year during the first three months of 2021. Its total subscriber count is now at 36 million. That's still a drop in the bucket compared to Netflix, which has more than 200 million subscribers. But as ViacomCBS puts more money into that area of its business, that gap will likely shrink over time.
For income investors, this stock is attractive because, unlike Netflix, ViacomCBS makes regular dividend payments while also focusing on growth. And its 2.4% yield is also higher than Walmart's current payout. Although it may not generate more than $480 on a $20,000 investment, the stock's potential to rise in value over time is what makes this a great buy, especially if Paramount+ does well. The company's diluted EPS of $1.44 in Q1 alone is already higher than its annual dividend of $0.96.
With a safe dividend and some exciting growth prospects, ViacomCBS is another stock that could make for a great long-term investment.